Value-Enhancing Patent Prosecution Strategies (Part 1 of 4)

In my role as the IP Strategist for a number of companies that do not employ in-house patent counsel, I am charged with making sure that my clients’ patenting efforts are in tune with their desired business outcomes. This means that instead of focusing on the drafting and prosecuting of patent applications that form the basis of most patent attorneys’ practices, I work at the front end of the patenting process to design patent strategies that will enhance my clients’ business value first and foremost. When alignment is created with business goals, subsequent patenting efforts will necessarily result in protection that matters to the value of the company. In this regard, I have a number of tools in my “Patent Strategy Toolbox” that I deploy regularly when developing patent prosecution recommendations. Notably, when I mention these tools to new clients, I find that few have been informed about these options by their regular patent counsel. This made me realize that these tools may not be used as often as I think is warranted in many situations. In the interest of spreading the word about these potentially value enhancing patent strategies, I will provide readers with a list of four available, but often infrequently used, patent procedures in this and subsequent posts.

Below is the first of these suggestions, with the rest to follow in coming weeks.

1. TrackOne Prioritized Examination in US the Patent Office (aka “accelerated prosecution” to obtain issuance of US utility patent in 1 year or less)

Accelerated “TrackOne” prioritized examination for utility application filings in the US has been available for a few years. The limited knowledge my new clients have about this procedure makes it seem like it is a well-kept secret to many patent seekers. This option needs to be better publicized because, for many companies, quick patent issuance can greatly decrease the risks associated with launching a new product or technology innovation.

I first found out about the TrackOne procedure shortly after it was initiated by the US Patent Office from a group of very senior corporate IP lawyer peers with whom I regularly network. Uniformly, these practitioners were enthusiastic about the new responsiveness of the US patent examiner corps to their patent application filings. Of course, one has to pay extra in exchange for a speedy examination, but, for some of their cases, my peers thought the procedure was well worth the premium, which is currently an extra $4000 for large companies, and $2000 for small companies in addition to the usual government patent filing fees.

For established companies like the ones my peers work at, the ability to obtain an issued patent in less than 1 year after filing instead of the typical 2-4 years allowed them to delay utility filings until the product to be protected by patents was close to market introduction. This was in contrast to the usual procedure in which a patent application is filed early in the product development cycle and therefore well in advance of a product’s introduction, which often means that the claims of the resulting patent do not match the final product design. By strategically delaying filing until closer to product go-to-market, these IP counsel could improve the odds that their issued patents actually covered the products that their companies were selling which, in turn, allowed them to reduce the risks that their competitors would be able to knock off their successful product introductions.

Since we who have been toiling in the US patent trenches for years are almost never pleased with the US Patent Office, my interest was piqued, and I decided to try the TrackOne procedure for a startup client where accelerated prosecution seemed warranted. This client, for which I work as part-time Chief IP Counsel, is developing disruptive imaging technology. While the company has obtained a good amount of seed funding, investors still view them as a risky proposition because the company is in technology development mode and is pre-revenue, and will be for some time. Typically, applications filed for startups like this client will sit awaiting examination for several years and, as such, the pending applications will have little influence on the startup’s valuation because any patent rights covering the subject technology will remain hypothetical until issuance. My client sought alternatives to the often-interminable wait times associated with obtaining patent protection in the US.

When filing the company’s “foundational” patent application—that is, the application intended to set out much of the ownership for this startup’s technical differentiation—I suggested that we choose TrackOne prioritized prosecution to speed up the examination process and, hopefully, the issuance of the company’s first patent. Using the TrackOne process, we indeed achieved a patent issuance in less than a year from the filing date of the utility application. Moreover, within about six months of initial application filing, we also could predict with good probability the scope of the issued patent, a fact that reduced uncertainty for my client, as well as for its investors. In short, our selection of the TrackOne process as a prosecution strategy paid off, and my client now holds broad patent protection to the technology on which its upcoming product offerings will be based. This issued patent will also now be incorporated into the company’s valuation, with the expected result being that upcoming investment terms will be more favorable to the company than could be expected for a pre-revenue technology startup.

The additional cost associated with seeking TrackOne examination can be a deterrent to selection of this procedure. Certainly, it would not make sense to go this route for all filings at most companies. I tell clients “most patents don’t matter to business, but when they matter, they matter a lot.” To this end, the TrackOne process should only be used strategically when the exclusivity provided by broad patent protection will add meaningfully to the bottom line. By “add meaningfully to the bottom line,” the issued patent claims should be directly aligned with a desired business outcome. For established companies, this desired business outcome may be to prevent competitors from providing consumers with a non-infringing substitute product. For startups that have not yet introduced a product (or that are in the early stages of doing so), the desired business outcome may be to obtain the higher valuation that is often associated with having an issued patent covering the company’s product or technology offering.

I also let clients know that the cost differential between TrackOne and regular utility patent prosecution may be overstated. Using the time-regulated TrackOne procedure, I have seen first office actions from examiners that appear better-reasoned, and directed toward concluding prosecution succinctly. This means that multiple back and forth communications between the patent attorney and examiner may be less likely, which will, in turn, reduce the overall cost of prosecution. The fee reductions resulting from lesser work for the attorney and fewer patent office post-filing costs (e.g., RCE, appeal, and continuation practice) could outweigh the initial extra TrackOne filing costs. Moreover, the “time value” of an issued patent versus a pending application may make it worthwhile to pay the extra filing costs.

Anecdotally, when reviewing various file histories for clients that hire me to evaluate prior art, I see that a number of startups engaging lawyers based in Silicon Valley and the Pacific Northwest appear to be selecting TrackOne prioritized examination more often than those companies that use lawyers located elsewhere. While this is certainly not a scientific sample, it may be that the accelerated TrackOne prosecution option is gaining traction in practice locations more known for being less conservative in approach. Of course, “your mileage may vary” with the value of TrackOne prosecution for your patents, and any company interested in this option should be fully apprised of the cost/benefit aspects for its own situations.